however, our audit committee focuses on risk related to accounting, internal controls and financial and tax reporting. The audit committee also assesses economic and business risks and monitors
compliance with ethical standards. Our board of directors annually appoints one member of the audit committee to serve as an Enterprise Risk Management, or ERM, Liaison. The ERM Liaison assists the audit committee with its review and
consideration of ERM issues across all board committees.
Our nominating committee identifies and oversees risks associated with director independence, related
person transactions and the implementation of corporate governance policies. Risks associated with our investment portfolio and the portfolios of the companies we manage are identified and assessed by our Investment Committee.
Our Executive Compensation and Development Committee, or compensation committee, identifies and oversees risks associated with our executive compensation
policies and practices. We periodically conduct a comprehensive compensation risk assessment. The assessment includes a review of all executive and
non-executive
incentive plans. We evaluate the risks
associated with each of our compensation plans and the effectiveness of certain risk-mitigating factors, including the following:
Plan Governance.
All
of our incentive plans have written plan documents. Depending on the plan, amendments require the approval of either the compensation committee or our Human Resources Division.
Performance Metrics and Goals.
Performance metrics are generally a blend of corporate and individual goals. Corporate performance goals are the same for
both our executive incentive plans and our
non-executive
incentive plans. For incentive plans subject to Section 162(m) of the Internal Revenue Code of 1986, or the Code, performance
goals are established within the first 90 days of the performance period and may not be changed. For plans not subject to Section 162(m), performance goals can only be modified during the performance period in accordance with certain
defined processes and controls.
Negative Discretion.
For plans subject to Section 162(m) of the Code, discretion may only be applied to reduce the
amount of a payout and may not be applied to increase the amount of a payout.
Pay Mix.
The emphasis on variable pay and variable pay opportunities
increases in the higher job levels of the organization.
Recoupment of Bonuses.
Each incentive plan is subject to a recoupment policy or provisions.
Maximum Payout Limit.
Each plan contains a maximum payout limit.
Based
on the results of these periodic assessments, we conclude that our compensation programs do not create undue material risk to the Company. There have been no material changes to our incentive plans or the above risk-mitigating factors since our last
assessment and we have not identified any new risks that would change this conclusion.
Committees of Our Board
Our board of directors met five times in 2017. The standing committees of our board of directors are our executive committee, audit committee, compensation
committee, nominating committee, charitable giving committee, investment committee, strategy committee and exchange relationship committee.
Our executive committee,
which did not meet during 2017, has the authority, subject to certain limitations, to exercise the power of our board of directors between regular meetings.
Our
audit committee met eight times in 2017. Consistent with Section 1405(c)(4) of the Holding Companies Act and the Sarbanes-Oxley Act of 2002, or Sarbanes-Oxley, our audit committee has responsibility for the selection of independent
registered public accountants, reviewing the scope and results of their audit and reviewing our financial condition and the adequacy of our accounting, financial, internal and operating controls. Our audit committee operates pursuant to a written
charter, a copy of which may be viewed on our website at:
http://www.erieinsurance.com
.
Our compensation committee met five times in 2017. Consistent with
Section 1405(c)(4.1) of the Holding Companies Act and our bylaws, our compensation committee has responsibility for recommending to our board of
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Erie Indemnity Company